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KB Home Q1 net orders fall on higher cancellations

Tags: KB Home

KB Home (KBH-N) posted a wider-than-expected quarterly loss, hurt by lower margins, and the fifth-largest U.S. homebuilder said net orders for new homes declined as cancellations rose, sending its shares down sharply.

The company said orders fell 8 percent to 1,197 homes in the quarter. New orders at the west coast region fell 28 percent to 289 homes.

Orders are a key indicator for builders who do not book revenue until they close on a house.

KB Home, which had posted strong order growth in the last two quarters, blamed a rise in cancellation rate to 36 percent from 29 percent last year for the fall in net orders.

The decline is in sharp contrast to the strong order growth reported by other U.S. homebuilders. Companies, including D.R. Horton Inc. (DHI-N), Pulte Group Inc. (PHM-N) and Lennar Corp. (LEN-N), have forecast an improving housing market.

KB Home, however, said the pace of the recovery was uneven, with certain markets showing greater strength.

The housing market is healing from a collapse that triggered the 2007-09 recession, but a glut of unsold properties and high unemployment have hindered the recovery.

Data released on Tuesday showed permits to build homes rose to a near 3-1/2 year high in February.

KB Home said housing gross margin for the quarter fell to 9.7 percent from 12.6 percent last year.

The first-quarter net loss was $45.8 million US, or 59 cents per share, down from $114.5 million, or $1.49 per share, a year ago. Revenue rose 29 percent to $254.6 million.

Analysts were expecting a loss of 24 cents per share on revenue of $337.7 million, according to Thomson Reuters I/B/E/S. CTV Two CTV News CTV News Channel BNN - Business News Network CP24